An HSA shelters $4,400 in 2026. The plan it requires can cost $8,500
The 2026 HSA limits, the high-deductible plan rules that come with them, the three tax exemptions in the IRS's own words, and a 20-year illustration.
- What happened
- For calendar year 2026 the IRS set the health savings account contribution limit at $4,400 for self-only coverage and $8,750 for family coverage (Rev. Proc. 2025-19, Internal Revenue Bulletin of May 19, 2025). The same document sets the plan an account holder must carry: a deductible of at least $1,700 or $3,400, with out-of-pocket costs capped at $8,500 or $17,000.
- Why
- Section 223 of the tax code lets contributions be deducted, lets earnings accumulate untaxed, and lets withdrawals for qualified medical expenses out untaxed. No other account in the code does all three. The price of entry is a plan whose out-of-pocket ceiling is close to twice the amount the account can shelter.
- The numbers that matter
- $4,400 / $8,750HSA contribution limit, self-only / family, calendar year 2026$1,700 / $3,400Minimum HDHP deductible, self-only / family, 2026$8,500 / $17,000Maximum HDHP out-of-pocket, self-only / family, 2026$1,000Additional contribution from age 55, Publication 969
- Why it matters
- A self-only account holder can put away $4,400 a year before tax, but in a bad year the plan that makes them eligible can require $8,500 out of pocket. Which of those two numbers a household meets first is the whole decision.
- What happens nextas we saw it on 13 Oct 2026
- The 2027 amounts are already published: $4,500 self-only and $9,000 family (Rev. Proc. 2026-24, Internal Revenue Bulletin of June 15, 2026). They take effect for HSAs for calendar year 2027.
The account shelters $4,400 a year; the plan it requires can cost up to $8,500 a year out of pocket.
| HDHP maximum out-of-pocket | 8500 |
|---|---|
| HSA contribution limit | 4400 |
| HDHP minimum deductible | 1700 |
| Additional contribution from age 55 | 1000 |
The health savings account is the only account in the US tax code that lets money in untaxed, lets it grow untaxed and lets it out untaxed. For calendar year 2026 the Internal Revenue Service allows $4,400 of it for a person with self-only coverage and $8,750 for family coverage. The catch is in the same two-page document that sets those limits. To be eligible at all, the account holder must be covered by a plan with a deductible of at least $1,700 (self-only) or $3,400 (family), and the plan may require the holder to pay up to $8,500 or $17,000 out of pocket in a year before it covers everything.
This piece sets out the 2026 numbers from the IRS's own revenue procedure, the three exemptions in the IRS's own words, what counts as a medical expense, and an illustration of what the exemptions are worth over 20 years at a stated return. The 2026 retirement limits piece covers how the HSA limit sits beside the 401(k) and IRA limits, so that is not repeated here.
The 2026 numbers, and the 2027 ones
The IRS revenue procedure published in Internal Revenue Bulletin 2025-21 on May 19, 2025 states that “for calendar year 2026, the annual limitation on deductions under § 223(b)(2)(A)” for self-only coverage is $4,400, and for an individual with family coverage is $8,750. The same document defines a high deductible health plan for 2026 as one with an annual deductible “not less than $1,700 for self-only coverage or $3,400 for family coverage” and annual out-of-pocket expenses that “do not exceed $8,500 for self-only coverage or $17,000 for family coverage”. It states it “is effective for HSAs for calendar year 2026”.
Internal Revenue Bulletin 2026-25, dated June 15, 2026, carries Rev. Proc. 2026-24, which “provides the 2027 inflation adjusted amounts for Health Savings Accounts”. For calendar year 2027 the contribution limits are $4,500 self-only and $9,000 family; the minimum deductibles are $1,750 and $3,500; the out-of-pocket maximums are $8,700 and $17,400.
| Item | 2026 (Rev. Proc. 2025-19) | 2027 (Rev. Proc. 2026-24) | Change |
|---|---|---|---|
| HSA contribution limit, self-only | $4,400 | $4,500 | +$100 (+2.3%) |
| HSA contribution limit, family | $8,750 | $9,000 | +$250 (+2.9%) |
| HDHP minimum deductible, self-only | $1,700 | $1,750 | +$50 |
| HDHP minimum deductible, family | $3,400 | $3,500 | +$100 |
| HDHP maximum out-of-pocket, self-only | $8,500 | $8,700 | +$200 |
| HDHP maximum out-of-pocket, family | $17,000 | $17,400 | +$400 |
| Additional contribution, age 55 or older | $1,000 | $1,000 | Not indexed |
Publication 969 states that “if you are an eligible individual who is age 55 or older at the end of your tax year”, the contribution limit is increased by $1,000. It is not indexed, so it is the same $1,000 in 2027. A 55-year-old with self-only coverage can therefore contribute $4,400 + $1,000 = $5,400 in 2026; with family coverage, $8,750 + $1,000 = $9,750.
The three exemptions, in the IRS's words
Publication 969 (2025) states: “You can claim a tax deduction for contributions you or someone other than your employer make to your HSA”; “The interest or other earnings on the assets in the account are tax free”; and “Distributions may be tax free if you pay qualified medical expenses”. The publication adds that “you must reduce the amount you or any other person can contribute to your HSA by the amount of any contributions made by your employer”. The $4,400 is a ceiling on everybody's contributions combined.
The HSA is not use-it-or-lose-it: Publication 969 states that amounts remaining at the end of the year are generally carried over. The penalty for using the money on something else is stated plainly: “There is an additional 20% tax on the part of your distributions not used for qualified medical expenses.” And the exception: “There is no additional tax on distributions made after the date you are disabled, reach age 65, or die.” After 65 a non-medical withdrawal is taxed as income, like a traditional IRA withdrawal.
To contribute, Publication 969 says you must be covered under a high deductible health plan “on the first day of the month”, have no other health coverage except what is permitted, not be “enrolled in Medicare”, and not be claimable as a dependent. Medicare enrolment ends new contributions but not the account, and the publication lists “Medicare and other health care coverage if you were 65 or older” among the premiums it can pay, excluding “a Medicare supplemental policy, such as Medigap”.
Two smaller rules. Publication 969 states that “generally, you must pay a 6% excise tax on excess contributions”, for each year the excess remains. And a move from a traditional or Roth IRA into an HSA is allowed, but “you can generally make only one qualified HSA funding distribution during your lifetime”.
What counts as a medical expense
The third exemption depends on the definition of a qualified medical expense. Publication 969 points to medical care under section 213(d), the definition Publication 502 uses for the itemised deduction. Publication 502 (2025) states it as “the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body”.
- Included, per Publication 502: dental care including braces and dentures; eyeglasses and contact lenses needed for medical reasons; hearing aids; prescribed medicines and insulin; wheelchairs and crutches; physical examinations and diagnostic tests; hospital care; qualified long-term care services; Medicare Part B and Part D premiums.
- Not included, per Publication 502: cosmetic surgery (with exceptions for congenital abnormalities, injuries and disfiguring disease); health club dues; vitamins unless a physician recommends them for a diagnosed condition; funeral expenses; household help; controlled substances even where state law allows them.
- Insurance premiums are the exception to the exception. Publication 969 states “you may not use HSA funds to pay for insurance”, then lists four kinds you may: long-term care insurance, COBRA continuation coverage, health coverage while receiving unemployment compensation, and Medicare or other health coverage from age 65 (not Medigap).
- Menstrual products count. Publication 969 states that “amounts paid for menstrual care products are treated as paid for medical care”.
What the three exemptions are worth: a 20-year illustration
What follows is an illustration, not a projection. It assumes a 5% annual return, compounded once a year, on $4,400 contributed at the end of each year for 20 years, and a 22% marginal income tax rate throughout. The assumptions are chosen to make the mechanism visible, not as a forecast. Real returns vary, limits are indexed, and tax rates change.
Future value of an annuity: 4,400 × ((1.05^20 − 1) ÷ 0.05) = 4,400 × 33.066 = $145,490. Of that, $88,000 is contributions (20 × $4,400) and $57,490 is growth. Spent on qualified medical expenses, the whole $145,490 comes out untaxed. Spent on anything else after age 65, it is taxed as income; at 22% the holder keeps $113,482.
Paying 22% income tax first leaves $4,400 × 0.78 = $3,432 a year to invest. Taxing the 5% return each year at 22% leaves 3.9%. Then 3,432 × ((1.039^20 − 1) ÷ 0.039) = $101,144. The gap to the HSA's $145,490 is $44,346, which is the combined value of the first two exemptions on these assumptions. This overstates the drag on a buy-and-hold stock portfolio, where gains are taxed at lower rates and only on sale, so the gap is an upper bound for that comparison.
A pre-tax account (deduct now, pay 22% later) ends at $145,490 × 0.78 = $113,482. A Roth-style account (pay 22% now, nothing later) invests $3,432 a year at the full 5% and reaches 3,432 × 33.066 = $113,482. Identical, which is the standard result when the tax rate is the same going in and coming out. The HSA beats both by $32,008 on these assumptions, and only if the money is spent on medical care. On a non-medical withdrawal after 65 it matches the pre-tax account exactly.
The other side of the ledger: the deductible
Every figure above requires the holder to be covered by a high-deductible plan. The revenue procedure that sets the $4,400 also sets what that plan is allowed to charge.
Self-only coverage: maximum out-of-pocket $8,500 ÷ contribution limit $4,400 = 1.93. Family coverage: $17,000 ÷ $8,750 = 1.94. A self-only holder who contributes the full $4,400 and then has a year that reaches the plan's ceiling is $4,100 short of covering it from that year's contribution; a family is $8,250 short. The 20-year illustration assumes nothing is spent along the way, which holds only for a household that pays its medical bills from other income.
The three exemptions are worth most to a household that funds the account fully, pays medical costs from cash and lets the balance compound for decades. They are worth least to a household that needs the money for the deductible in the year it goes in, because the growth and withdrawal exemptions then have nothing to work on. The deduction still applies, and $968 on $4,400 at a 22% rate is not nothing, but it is one exemption rather than three. That is our reading of the rules, not a statement in them.
What it means for your money
The two numbers to put side by side are the plan's out-of-pocket maximum and the account's contribution limit: $8,500 and $4,400 for self-only coverage in 2026, $17,000 and $8,750 for family coverage.
- Check the plan, not the label. The bounds are in Rev. Proc. 2025-19; the actual deductible and ceiling are in the plan document.
- Count employer money against the limit. If an employer puts in $1,000, the holder's own room in 2026 is $3,400, not $4,400.
- From age 55, add $1,000. The limit becomes $5,400 or $9,750 in 2026.
- Mind the Medicare date. Contributions stop at Medicare enrolment; the balance stays, and from 65 it can pay Part B and Part D premiums.
- Keep receipts with your tax records. The 20% additional tax applies to any withdrawal before 65 that cannot be shown to have paid for medical care.
Why an untaxed 5% and a taxed 3.9% diverge so far over 20 years is set out in the compound growth lesson; what a 2046 balance buys is the subject of nominal versus real.
Sources
- Rev. Proc. 2025-19, 2026 inflation adjusted amounts for Health Savings Accounts (section 223)Internal Revenue Service · Oct 12, 2026 · Primary source
- Internal Revenue Bulletin 2025-21 (May 19, 2025), containing Rev. Proc. 2025-19Internal Revenue Service · Oct 12, 2026 · Primary source
- Rev. Proc. 2026-24, 2027 inflation adjusted amounts for Health Savings Accounts (section 223)Internal Revenue Service · Oct 12, 2026 · Primary source
- Internal Revenue Bulletin 2026-25 (June 15, 2026), containing Rev. Proc. 2026-24Internal Revenue Service · Oct 12, 2026 · Primary source
- Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health PlansInternal Revenue Service · Oct 12, 2026 · Primary source
- Publication 502 (2025), Medical and Dental ExpensesInternal Revenue Service · Oct 12, 2026 · Primary source
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